Janitorial / Commercial Cleaning Franchise Issues
March 9, 2012
Janitorial / Commercial Cleaning Franchise Issues
FRANCHISE LAWSUITS: Noble Roman’s Granted Summary Judgment Against Franchisees
February 3, 2012
Noble Roman’s franchise lawsuit news. Kari Heyser, Fred Eric Heyser and Meck Enterprises, LLC, et al v. Noble Roman’s, Inc. et al, lawsuit was filed in Superior Court in Hamilton County, Indiana on June 19, 2008.
The franchisee plaintiffs alleged that Noble Roman’s fraudulently induced them to purchase franchises for traditional locations through misrepresentations and omissions of material facts regarding the franchises.
[Also read: NOBLE ROMAN’S PIZZA: Worst Franchises for SBA Loan Defaults]
Noble Roman’s filed counterclaims for damages for breach of contract against all of the Plaintiffs in the approximate amount of $3.6 million plus attorney’s fees, interest and other cost of collection, or a total of over $5 million.
As a result of the Order filed January 26, 2012, the company’s partial summary judgment motions were granted as to specific types of damages such as past fees, future fees, attorney’s fees and interest.
Here is Noble Roman’s press release on the granting of the summary judgement.
press release Jan. 30, 2012, 5:00 p.m. EST
Noble Roman’s Granted Summary Judgment on Counterclaims Against Plaintiffs
INDIANAPOLIS, Jan 30, 2012 (GlobeNewswire via COMTEX) — Noble Roman’s, Inc. /quotes/zigman/235863 NROM -5.67% , the Indianapolis based, non-traditional franchisor and licensor of Noble Roman’s Pizza and Tuscano’s Italian Style Subs, today announced that in an Order by the Hamilton Superior Court I filed January 26, 2012 in the long-standing lawsuit by certain former franchisees, Noble Roman’s was granted partial summary judgment as to liability against the Plaintiffs/Counter-Defendants on the company’s counterclaims against them. As a result of this partial summary judgment, the Court determined that certain of the former franchisees of Noble Roman’s, Inc. were liable to the company for direct damages and consequential damages, including net loss future royalties, for breach of their franchise agreements. In addition, the Court determined that, as a matter of law, Noble Roman’s was entitled to recover attorneys fees associated with obtaining preliminary injunctions, fees resulting from the prosecution of Noble Roman’s counterclaims and fees for defending against fraud claims against the company and certain of its officers. The amount of the award is to be determined at trial.
The company was a Defendant in a lawsuit styled Kari Heyser, Fred Eric Heyser and Meck Enterprises, LLC, et al v. Noble Roman’s, Inc. et al, filed in Superior Court in Hamilton County, Indiana on June 19, 2008 (Cause No. 29D01 0806 PL 739). The Court issued an Order dated December 23, 2010 granting summary judgment in favor of the company against all of the Plaintiffs allegations of fraud. As a result, the Plaintiffs’ allegations of fraud against the company and certain of its officers were determined to be without merit. Plaintiffs previously filed numerous motions, including an appeal to the Indiana Court of Appeals, in an attempt to get the December 23, 2010 summary judgment order reversed. All of those attempts have failed, including the Indiana Court of Appeals which dismissed the appeal with prejudice. Plaintiffs’ last attempt to get the summary judgment award vacated was their attempt to vacate the Order on the grounds of misconduct of third parties. On December 1, 2011, the Judge issued an Order denying their request and specifically found "that there was absolutely no evidence of misconduct and the Court admonished Plaintiffs and Plaintiffs’ counsel for making such unfounded allegations." The fraud charges against the company and certain of its officers have been dismissed entirely, and Plaintiffs have no appeal rights remaining.
The Complaint was originally against the company and certain officers and institutional lenders. The Plaintiffs are former franchisees of the company’s traditional location venue. The Plaintiffs alleged that the Defendants fraudulently induced them to purchase franchises for traditional locations through misrepresentations and omissions of material facts regarding the franchises. In addition to the above claims, one franchisee/Plaintiff in the case asserted a separate claim under the Indiana Franchise Act as to which the Court’s Order denied the company’s motion for summary judgment, as the Court determined that there is a genuine issue of material fact, but did not render any opinion on the merits of the claim. The company denies liability on the Indiana Franchise Act claim and will continue to vigorously prosecute its defenses against the claim.
The company filed counterclaims for damages for breach of contract against all of the Plaintiffs in the approximate amount of $3.6 million plus attorney’s fees, interest and other cost of collection, or a total of over $5 million. As a result of the Order filed January 26, 2012, the company’s partial summary judgment motions were granted as to specific types of damages such as past fees, future fees, attorney’s fees and interest. The amount of the damages awarded to the company will be determined at trial.
SOURCE: Noble Roman’s, Inc. CONTACT: Paul Mobley, Chairman & CEO 317/634-3377
ARE YOU FAMILIAR WITH THIS CASE AND/OR THE NOBLE ROMAN’S FRANCHISE OPPORTUNITY? SHARE AN OPINION OR INSIGHT BELOW.
Contact the author of site admin at UnhappyFranchisee[at]gmail.com
Mobile Tool Franchise Guide
January 3, 2012
Mobile Tool Franchise Issues & Index Read more
MATCO TOOLS Distributor Franchise [UPDATED]
December 7, 2011
Is Matco Tooling or Fooling?
Matco Tools aggressively promotes its mobile distributor franchise as a great investment. Angry Matco Tools distributors claim it’s a calculated, unethical franchise scheme that profits from their failures. Who’s telling the truth? Read more… Read more
FRANCHISE DUE DILIGENCE is More Critical Than Ever (Attorney Jon Fortman)
November 18, 2011
Franchise due diligence, thorough franchise research and consultation with qualified professionals before buying a franchise is more critical than ever, according to attorney Jon Fortman.
Fortman, of St. Louis-based Fortman Law, is an attorney who represents franchisees who believe they’ve been defrauded or treated unfairly by franchisors.
While the legal agreements governing the franchise relationship have always been undisputedly one-sided in favor of the franchisor, Fortman reports that the playing field is less level than ever before… and getting worse.
In a recent blog post, Fortman writes:
“…franchisers are tightening the reins on the franchisees while making sure the franchise agreement is written in such a way that they really have no obligation beyond letting the franchisee use the marks and providing some minimal training.
“For instance, five years ago a franchise agreement may have said the franchisor SHALL provide training on a quarterly basis. Now, the same agreement will say that the franchisor MAY, in its absolute discretion, provide training on a quarterly basis.
I am amazed at the number of franchisees who signed their agreements and never saw an attorney… The contract may be a ten-year term. That’s a long time if you rush into something without proper investigation. – Attorney Jon Fortman
Writes Fortman: “There are more terminations and the ability of many franchisees to seek a remedy from the franchisor has been limited by arbitration provisions and the inability to pay for an attorney to fight the battle. I have only been doing these types of cases for about five years. I can see that during that time the relationship between franchisor and franchisee seems to be more strained and there is a lot of caution and suspicion when they interact. It has led to communication issues which is never good.
“Some [franchisors] blame the franchisees, and the attorneys representing them, because they believe franchisees don’t take responsibility for their success and are quick to blame the franchisor. There are some franchisees who do not get proper advice and do not fully understand the relationship between the parties.
“I am amazed at the number of franchisees who signed their agreements and never saw an attorney. They will pay significant amounts of money to buy a franchise that is based on a legal contract. The contract may be a ten-year term. That’s a long time if you rush into something without proper investigation.”
It is critical for prospective franchise owners to do their own thorough due diligence and research prior to committing to any franchise or business opportunity.
Just reading franchise publications supported by franchisor advertising or the franchisor’s list of testimonials and awards is not due diligence. Prospective franchisees must dig in with a skeptical and thorough approach in order to find out the truth about a given franchise opportunity or company. And they must spend a few bucks (that’s right, spend a few bucks) on getting advice from experienced franchise professionals paid to give honest, frank advice.
Writes Fortman:
“My advice to those of you considering the purchase of a franchise still remains the same. You must do your own investigation. It is even more important these days. Call every franchise owner listed in the disclosure document. That includes the open and closed locations.
The franchisor has a vested interest in seeing you buy into the system. Regardless of what the salesman says, their interest and your interest in the transaction are not the same. – Attorney Jon Fortman
“If it is a newer system, you must consider that there may not have been enough time for any flaws in the system to appear.
“The Internet has several sites that discuss franchising. I review the site www.unhappyfranchisee.com every day. That type of site lets you see what can happen if you don’t protect yourself. It also gives you examples of the types of things to look out for when making your decision.
“You also must speak to an accountant and an attorney, preferably ones who are familiar with franchising. They can spot areas of concern and get clarification for you from the franchisor….
“The franchisor has a vested interest in seeing you buy into the system. Regardless of what the salesman says, their interest and your interest in the transaction are not the same. A healthy dose of skepticism in any of these transactions can help you stay alert and spot problems before you sink your money into the franchise.”
“An Ounce of Prevention…”
Benjamin Franklin said “An ounce of prevention is worth a pound of cure.”
In franchising, a few thousand dollars and thorough due diligence can be worth hundreds of thousands of dollars and years of either prosperity – or misery.
The pages of UnhappyFranchisee.com are filled with the stories of those who wish they had done their homework more diligently before they took the leap.
Take our advice and investigate thoroughly before investing.
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
To contact the author or site admin, email UnhappyFranchisee[at]Gmail.com
FRANCHISE LAWSUIT Alleges Matco Tools Scam, TD Bank Fraud
November 15, 2011
Matco Tools & TD Bank worked together to scam Matco franchise owners, the Small Business Administration (SBA) and American taxpayers, according to a class action franchise lawsuit filed by Marks & Klein, LLP of Red Bank, N.J. yesterday.
The press release issued by Marks & Klein, LLP is included below.
UnhappyFranchisee.com intends to follow this case and other allegations against Matco as they unfold.
If you are familiar with the Matco Tools franchise or distributorship programs, please share your insights or opinions with a comment below.
Representatives of Matco Tools, TD Bank or others are invited to submit clarification, opposing opinions or rebuttals for publication. Contact the site ADMIN at UnhappyFranchisee[at]gmail.com.
Also read: MATCO TOOLS Franchise Complaints.
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Marks & Klein franchise lawsuit press release:
Father & Son File Lawsuit Against Matco Tools and TD Bank
Class Action Lawsuit Claims the Tool Company and Bank Engaged in Widespread SBA Loan Fraud
TRENTON – A father and son – David Villano, Jr. and David Villano III, through their attorneys, Marks & Klein, LLP of Red Bank, N.J., today filed a class action lawsuit against TD Bank and Matco Tools, Inc. alleging the tool company franchisor and the bank engaged in a loan fraud scheme to encourage unsophisticated borrowers to enter into risky business loans to buy Matco Tools franchises.
The scheme enabled Matco to sell more franchises and TD Bank to make risky loans without concern. The bank knew if the loans failed, the loans would ultimately be repaid by United States taxpayers through the SBA guaranteed loan program. Data from the SBA shows that from 2000 to 2010, Matco Tools’ SBA loans had a staggering 37.3 percent failure rate.
“It is most unfortunate that SBA loans, which are designed to assist aspiring entrepreneurs to finance a new business venture and benefit the economy could, as alleged in this case, be used for such deceitful purposes,” said Gerald A. (Jerry) Marks, Esq., lead plaintiff counsel.
“Many individuals like the Villanos have unknowingly been exploited,” Marks said. “We are seeking treble damages to discourage this sort of conduct from happening again in the future. United States taxpayers have unwittingly been `bailing out’ lenders like TD for years on defaulted loans that should never have been made in the first place.”
The lawsuit alleges that Matco and TD conspired to make loans using secret three-year income projections, in violation of FTC franchise disclosure regulations. Specifically, Matco would deliver the secret three-year income projections to TD Bank with a letter, instructing bank officials not to disclose the projections to loan applicants.
The bank would then use the income projections to qualify the loans for SBA financing. But Matco kept the projections secret because it knew of the high rate of failure among its franchisees and feared the lackluster projections would be used by failed franchisees filing suit.
The lawsuit further states that Matco, TD Bank and other unscrupulous SBA lenders preyed upon the Villanos and other unsophisticated borrowers because of their perception that the lender would not make the loan unless it believed the Matco franchise was an acceptable business opportunity.
According to the lawsuit, TD Bank profited through its collection of loan origination fees as well as interest on the loan principal, which it collected from borrowers while these improper loans were current. When the loans would ultimately fail, TD bank and other lenders would pass along the loss to the American taxpayer, as SBA loans are 90 percent guaranteed by taxpayers, according to the FDIC.
Matco, as the franchisor, would likewise profit from the sale of a new franchise and having its franchised distributors sell tool products for two to three years in a designated route, before ultimately failing and being replaced by a new franchisee.
“Matco and TD had the ability to perpetuate this scheme because of a self-serving lending culture that was more than happy to originate and collect fees and pass along the risk of loss to its customers and taxpayers, even if the law was being violated,” said Louis Tambaro, Esq., another member of Marks & Klein. “By bringing this lawsuit as a national class action, we look forward to exposing the dark underbelly of a destructive lending culture.”
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ARE YOU FAMILIAR WITH MATCO TOOLS FRANCHISE OR DISTRIBUTORSHIP? SHARE A COMMENT BELOW.
Contact the author or site admin at UnhappyFranchisee[at]gmail.com.
Top 100 Franchise Opportunities 2011: Behind The Hype
July 18, 2011
Are these REALLY America’s 100 Best Franchise Opportunities? Hear what their franchise owners have to say…
Franchise marketers and salespeople love to brag about their high franchise rankings and the awards they receive from the publications and groups they pay handsomely to promote their franchise opportunities.
And the King of all franchise rankings is Entrepreneur Magazine’s annual Franchise 500. Even franchise #486 brags about its Entrepreneur ranking on its franchise website.
Which of these franchise opportunities do you think deserve to be listed in the Top 100? Read more
Franchisee Bill of Rights: What Would You Include?
April 27, 2011
Franchisee Bill of Rights: What Would You Include?
10 Considerations Before Investing in a Franchise
February 13, 2011
10 Considerations Before Investing in a Franchise
TAX FRANCHISES: Biggest Winners & Losers of 2010
January 12, 2011
TAX FRANCHISES: Biggest Winners & Losers of 2010 Learn which tax prep franchise chains have grown – and which have declined - in the past three years. Read more
